''Republic of Argentina v. NML Capital, Ltd.'', 573 U.S. 134 (2014), is a U.S. Supreme Court opinion regarding foreign sovereign immunity. After defaulting on its debt and losing a federal collection action, Argentina claimed that its foreign assets were immune from discovery. The Court found that no such immunity existed..''The Supreme Court, 2013 Term - Leading Cases''
128 Harv. L. Rev. 381 (2014) On the same day as it announced this opinion the Supreme Court denied Argentina's appeal of a court order prohibiting Argentina from giving preference to certain creditors. This was the third case involving Argentina that term, with ''BG Group Plc v. Republic of Argentina'' involving Argentina's refusal to obey a neutral arbitrator's order and '' Daimler AG v. Bauman'' involving atrocities committed by the Argentinian military junta during its

Dirty War The Dirty War ( es, Guerra sucia) is the name used by the military junta or civic-military dictatorship of Argentina ( es, dictadura cívico-militar de Argentina, links=no) for the period of state terrorism in Argentina from 1974 to 1983 as ...

Background

In 2001 Argentina was in a severe economic depression. NML Capital, a '

vulture fund A vulture fund is a hedge fund, private-equity fund or distressed debt fund, that invests in debt considered to be very weak or in default, known as distressed securities. Investors in the fund profit by buying debt at a discounted price on a ...

' that specializes in distressed sovereign debt, purchased Argentine public bonds at extreme discounts off a panicking market. Argentina then defaulted on $103 billion of debt. After announcing that it would not pay its debts Argentina offered its creditors a choice: accept new bonds worth 70% less, or receive nothing. The vast majority of bondholders accepted the new bonds. NML Capital did not. Instead, NML Capital brought a collection action against Argentina in Manhattan federal district court. Finding that Argentina did have to pay its debt, District Judge Thomas Griesa ordered Argentina to pay plaintiff $2.4 billion and, ''

pari passu ''Pari passu'' is a Latin phrase that literally means "with an equal step" or "on equal footing". It is sometimes translated as "ranking equally", "hand-in-hand", "with equal force", or "moving together", and by extension, "fairly", "without pa ...

'', to stop favoring other creditors over NML Capital. Argentina responded by pulling its assets out of the United States. Seeking to satisfy the judgment order, NML Capital undertook a worldwide search for Argentina's assets, at one point convincing Ghana to seize the Argentine Navy's and forcing Argentina's president to charter private airplanes to avoid having her state aircraft confiscated. As part of its search for attachable assets NML Capital served subpoenas on

Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...

and Banco de la Nación Argentina. Argentina moved to quash, claiming that as a sovereign the locations of its assets were immune from discovery. Judge Griesa disagreed, ordering discovery on all assets "reasonably calculated to lead to attachable property." On Argentina's appeal the Second Circuit affirmed the discovery order. Still refusing to comply, Argentina then petitioned for a writ of certiorari from the Supreme Court of the United States, and the petition was granted. Arguments were held on April 21, 2014, with Deputy Solicitor General Edwin Kneedler appearing as an friend supporting Argentina and

Theodore Olson Theodore Bevry Olson (born September 11, 1940) is an American lawyer, practicing at the Washington, D.C., office of Gibson, Dunn & Crutcher. Olson served as United States Assistant Attorney General of the Office of Legal Counsel (1981–1984) ...

appearing for the hedge funds.

Opinion

The Supreme Court affirmed, with

Justice Scalia Antonin Gregory Scalia (; March 11, 1936 – February 13, 2016) was an American jurist who served as an associate justice of the Supreme Court of the United States from 1986 until his death in 2016. He was described as the intellectua ...

writing for the seven member majority. Scalia first traces the history of foreign sovereign immunity in the United States, from initially undisturbed Executive discretion, to the "muddling" noncommercial acts distinction the State Department adopted in 1952, to Congress's creation of the "comprehensive " Foreign Sovereign Immunities Act of 1976. Scalia then turns to the statute's text finding the FSIA does not expressly address post judgment discovery. Argentina claimed that there is "meaning from this silence ", and since discovery is not expressly permitted it is, then, prohibited. Scalia disagrees. Emphasizing that FSIA is the comprehensive framework for sovereign immunity, Scalia finds that any claimed immunity must stand or fall on the Act's text alone. Noting that the "riddle " of Congress's motive was not "ours to solve ", Scalia found that since Congress did not mention foreign sovereign immunity from post judgment discovery in the Act, there can be no such immunity.

Dissent

Justice Ginsburg Joan Ruth Bader Ginsburg ( ; ; March 15, 1933September 18, 2020) was an American lawyer and jurist who served as an associate justice of the Supreme Court of the United States from 1993 until her death in 2020. She was nominated by Presiden ...

dissented. Noting that FISA and international law only allow the attachment of commercial property, Ginsburg objected to the discovery order's "unlimited inquiry ". Because NML Capital had offered no proof that foreign noncommercial assets were subject to attachment, Ginsburg questioned what authorization a US court could have to act as a "clearinghouse for information " about Argentina's noncommercial property.

Reaction

One month later Argentina, again, defaulted on its debt. Argentina then unsuccessfully attempted to sue the United States at the Hague for "judicial malevolence". The

United Nations General Assembly The United Nations General Assembly (UNGA or GA; french: link=no, Assemblée générale, AG) is one of the six principal organs of the United Nations (UN), serving as the main deliberative, policymaking, and representative organ of the UN. Curr ...

condemned debt collection on sovereign debt. After Argentina continued to refuse to follow court orders, Judge Griesa held it in contempt. Creditors worldwide are imitating NML Capital, with Argentina losing lawsuits to creditors in Germany and England. On November 22, 2015 Argentina elected

Mauricio Macri Mauricio Macri (; born 8 February 1959) is an Argentine businessman and politician who served as the President of Argentina from 2015 to 2019. He has been the leader of the Republican Proposal (PRO) party since its founding in 2005. He previo ...

as its new president. By February 19, 2016 Argentina had reached a settlement with its bondholders and Judge Griesa lifted his injunction. On April 13, the Second Circuit affirmed, from the bench, directly after hearing oral arguments.

References

External links